Unique chemical product

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Madrigal Electromotive GmbH sells a unique chemical product. It has estimated its daily demand to be

P(Q) = 600 - 25Q

where P is the price charged per unit of the product, and Q is the number of units of the product demanded per day.

The company has estimated its total cost function to be:

TC(Q) = 1200 + 100Q

where Q is the number of units of the product produced per day. 

a) Determine the profit maximizing volume of production for Madrigal Electromotive GmbH. Answers may be expressed in either integer or non-integer values.

b) Using your solution above, compute the price that Madrigal Electromotive GmbH should charge for each unit of the product in order to maximize profit. 

c) Google Adwords will sell Madrigal Electromotive GmbH advertising at a daily cost of $3000 that will increase the demand for Madrigal Electromotive GmbH to P(Q) = 600 - 15Q. Should Madrigal Electromotive GmbH buy this advertising? Why or Why not?

Reference no: EM132173736

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